The battle between Redrow chairman Steve Morgan and one of the housebuilder’s
major shareholders, Fidelity, could derail his plans to make an offer
valuing the company at £610m.

An all-out war has erupted between Steve Morgan, chairman and founder of Redrow and one of the housebuilder’s investors, Fidelity, that could scupper Thursday's planned announcement for a £610m offer for the company.

After a week of negotiations, Redrow’s independent non-executive directors have agreed to put the 165p-a-share offer to shareholders with a neutral recommendation that will allow Redrow’s shareholders to make up their own minds.

However, the whole deal is now in jeopardy after complaints made to the UK Takeover Panel about the “joint offeror status” of Mr Morgan and Toscafund - the hedge fund that is working with him on the take-private of Redrow.

Mr Morgan’s 40.4pc stake in Redrow is through his investment vehicle Bridgemere Securities. Toscafund separately holds 16.7pc of the company. In order to make a joint bid the Panel have to approve the “joint offeror status” of Bridgemere and Tosca.

However, Fidelity has complained that with more than 57pc of the company, such a pairing would be unfair to smaller shareholders, who would have little power to vote down the deal, which only needs a 75pc to be voted through.

If Fidelity, which itself owns 10.5pc, succeeds in breaking up the collaboration between Mr Morgan and Toscafund the debt financing for the deal would almost certainly be lost. Mr Morgan would have to make the bid alone and Toscafund would need to be treated as any other shareholder.

The Takeover Panel has also been alerted to two separate sale purchases of 60,600 shares in Redrow by Fidelity, despite the fund manager having been made an “insider” to today’s proposed offer.

It is understood that Fidelity is claiming the two trades, which bought stock at an average of 158p-a-share, were done out of the US. Fidelity operates a Chinese wall between its UK fund managers and their American counterparts. However, questions have been raised about the seeming conflict of interest raised by trades, especially as flags were triggered after the initial transaction.

Mr Morgan, who owns the football team Wolverhampton Wanderers, first approached the company last month with a informal offer of 152p a share. Under Takeover Panel rules, he had until 5pm on Thursday to make a formal offer or walk away. Although this deadline has already been extended, sources did not expect it would be necessary to request another extension.

Shares in Redrow yesterday closed down 1.5 or 0.9pc at 158.5p, indicating the market expects an offer above 152p.